May 16, 2016
The increase raises the stakes after Tribune Publishing earlier this month rejected Gannett’s unsolicited bid to acquire the Chicago-based owner of the Chicago Tribune, Los Angeles Times and other major newspapers. The revised offer values Tribune Publishing at $864 million, rather than $815 million, including the assumption of debt.
“Gannett, with the assistance of its outside advisors, is ready to immediately engage with Tribune on an expedited basis,” Robert Dickey, president and chief executive officer of Gannett, said in a news release. “Our increased, all-cash offer provides Tribune shareholders with a significant premium of 99 percent and immediate, certain value. By not engaging constructively with Gannett … we believe Tribune is jeopardizing its shareholders’ investment and disregarding their best interests.”
Tribune Publishing confirmed receipt of the higher bid Monday and said in a news release its board will “thoroughly review” Gannett’s revised proposal.
The increased offer reflects additional analysis of Tribune financial statements filed earlier this month, and Gannett’s “greater confidence in its ability to yield addition operating improvements” in the transaction, the company said. Gannett previously said it would save $50 million annually through the Tribune Publishing acquisition.
McLean, Va.-based Gannett, publisher of USA Today and more than 100 newspapers, offered to buy Tribune Publishing for $12.25 per share in an all-cash deal that included the assumption of $390 million in debt. Tribune Publishing’s board voted unanimously to reject the offer May 4.
Tribune Publishing’s board adopted a “poison pill” approach May 9, preventing Gannett from going directly to Tribune Publishing shareholders with a tender offer.
Gannett and Tribune Publishing leadership met in Chicago on Thursday but reported no progress on the unsolicited bid, according to a Gannett filing Friday.
Tribune Publishing’s stock was up 23 percent to $14.10 in pre-market trading Monday and opened at $13.78 a share.
Tribune Publishing’s second-largest shareholder, Los Angeles investment firm Oaktree Capital Management, said earlier this month it wants the Chicago-based newspaper to explore a possible sale to Gannett.
“It is evident from our discussions with Tribune shareholders that there is overwhelming support for the companies to engage immediately regarding our proposed transaction,” John Jeffry Louis, chairman of Gannett’s board of directors, said in a statement Monday. “By increasing our offer at this time, we are reaffirming Gannett’s belief that this transaction would deliver significant value to both companies’ stakeholders and that the time to act is now.”